The maximum foreign earned income exclusion amount is adjusted annually for inflation. For tax year 2022, the maximum foreign earned income exclusion is the lesser of the foreign income earned or $112,000 per qualifying person. For tax year 2023, the maximum exclusion is $120,000 per person. If two individuals are married, and both work abroad and meet either the bona fide residence test or the physical presence test, each one can choose the foreign earned income exclusion. Together, they can exclude as much as $240,000 for the 2023 tax year.
While technically true, you are only really required to file, and then exempt your income via the foreign earned income exemption or the foreign tax credit. This one simple trick means 95% of all Americans working abroad pay no US tax.
China lacks a treaty with the USA, which means Americans working in China pay to Chinese social security/medical and they are not transferred to the American equivalents. But ya, you pay SS/medicare on your stock dividends and even your sales to pay taxes (consequently, which you might also pay Chinese payroll taxes on).
Setting up a corporation suggests that the business should pay the worker "wages" or a "salary". [3] One key difference is that wages are considered earned income, allowing the taxpayer to use the foreign earned income exclusion, while dividends are not.
[1] https://www.irs.gov/government-entities/federal-state-local-...
[2] https://www.irs.gov/businesses/international-businesses/roma...
[3] https://ustax.bz/how-to-structure-your-non-u-s-business-or-p...
Though my husband was all for adding me to his accounts, I’ve carefully kept our finances separate to prevent the nightmare scenario of a bank deciding its American customers are no longer worth the trouble and neither of us being able to get at our money, which happened to some Americans when FATCA was first introduced, and also so at least one of us can buy ETFs in an uncomplicated manner.
* As in, not wealthy enough to be well beyond having to work
I lived outside for 11 years, but in Switzerland before the crackdown on American accounts. China was no problem, even with FACTA, they just didn't care much, even for investments.
If your husband has a USA permanent resident or on an immigrant visa, the same that applies to you applies to him as well, FACTA applies to all US citizens as well as residents.
People complain about German bureaucracy, but I've found the residence permit process to be relatively straightforward and well-documented, and reasonably priced. They were clear about what documents they needed from us and when, and even helped me out when I nearly got stuck here because I applied for a renewal a bit too close to a trip to the States.
The US really should adopt a territorial tax system for individuals like the rest of the world but it might be reasonable to apply the system we currently use for individuals to corporations that do business in America to stop them from stashing cash overseas to dodge taxes.
[0]: https://americansoverseas.org/en/news/boris-johnson-american...